What does a Trump presidency mean for pharmaceutical prices?

Trump's victory sent biotech and pharma companies soaring in the stock market

Quite unexpectedly, Donald Trump has ascended into the White House. The Trump era will most likely see a tornado of changes, but what does it mean for the pharmaceutical industry?

Initially, his rival Hillary Clinton pledged to crack down on prescription drug prices during the campaign. All drug makers ranging from specialised treatments to mass-market generics have been put under the microscope over their price increase. The EpiPen was an example.

If she succeeded, the drug industry would have had to face the "worst-case scenario". But Clinton has received more funding for her campaign from the drug industry and this weakens her stance on the Big Pharma.

Friend or foe? Big Pharma uncertain as yet

On the other hand, drug costs were never a priority in Trump's campaign- until Clinton forced it upon him. On 25 January, he stunned the world by following the footsteps of Clinton and Sanders, breaking conservative orthodoxy, proposing that Medicare should directly negotiate the prices it pays for prescription drugs.

He endorses price transparency for the entire healthcare system and supports importing drugs from other countries - all of these policies were vigorously opposed by drug makers. Some healthcare professionals lauded on his move saying that "he’s honestly and forthrightly calling Big Pharma on its Big Baloney".

The populist idea of treating the pharmaceutical industry as greedy and powerful and promising to use the bulk purchasing power of Medicare to push down drug prices, resonates within the three candidates, just in different ways.

Trump win sends biotech and pharma stock soaring

But now, with the Republicans fully in control of the federal government, many market strategists believe that Trump will not focus much on high drug prices, and instead he may seek to repeal and replace the Affordable Care Act or more affectionately known as Obamacare.

He also said that he would allow health insurers to compete across state lines and keep costs down to allow Americans with pre-existing conditions - who have gained coverage thanks to Obamacare - to have health insurance.

"Controlling drug prices won't be a priority for Trump. So his election is a positive for pharma stocks and biotechs. He's more likely to look to make changes to Obamacare," said Amy Kong, senior portfolio manager with Fiduciary Trust Company International.

Ben Isgur, who analysed the election's health care implications for PricewaterhouseCoopers also mentioned that the Republicans will focus on "injecting more free market principles into the health system as we know it."

And this hope has sent the shares and stocks of the pharmaceutical industry soaring up after the election.

Mylan, the focus of the recent EpiPen drug war, rose by 5%. Shares of Merck, Pfizer, Allergan and Gilead Science saw a 6% increase and even European giants, Sanofi, Shire and GlaxoSmithKline increased exponentially.

How long will the positivity last?

But Clinton's attack on the pharmaceutical industry has garnered the attention of the public. This has forced Trump to deal with the widespread anxiety of drug costs, as the majority of Americans have realised the high costs of drugs and believe that the government should take some form of action.

"How are you going to respond to these consumers and make health care more affordable?" Isgur said. "This is front and centre for the new president and the new administration."

The current GOP-controlled Congress has also been working on legislation the past year, accelerating approvals of drugs and devices at the Food and Drug Administration, a bill that the Democratic party supports as well. These legislations, more often than not, cause public uproar.

Several drug lobbyists worry that they could lose support on their right flank after Medicare was endorsed to negotiate drug prices - a position abhorred by traditional conservatives. The populist members of the GOP may now feel empowered by Trump's victory.

The future remains unknown for drug makers

“I actually think the Republican Party is a far less certain bet for the pharmaceutical industry,” an industry official who wished to remain anonymous said, citing “the rise of populism in both parties.”

The future of drug companies is truly uncertain under the Republican rule as everything is under speculation; the Republicans want to curb the increase of Medicare and Medicaid spending and want to turn Medicaid into a block-grant program in hopes to solve Medicare's fiscal situation and GOP leaders see curbing drug costs to reduce government spending. MIMS

At the recent Malaysian Community Pharmacy Business Forum (MyCPBF), a discussion forum was held on the subject of “Transcending Primary Healthcare Services: The Future of Specialized Pharmacy Services and Pharmacy Specialization”.